The New Zealand dollar advanced against its US counterpart, after the Reserve Bank of New Zealand (RBNZ) revised downwards its inflationary expectations for the fourth quarter . This seems to have had a limited impact on the NZD/USD cross, as sentiment was still under the influence of Fed Chair-nominee Janet Yellens statement last week.
NZD/USD reached a session high at 0.8368 at 8:07 GMT, gaining 0.26%. Support was to be encountered on 15-th of November low 0.8268, while resistance was to be found on yesterdays session high (18-th of November) at 0.8415,which was the high of 6-th of November.
Data showed today that “maybe we are not in as inflationary an environment in New Zealand as what we thought,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. Investors taking profit on short Aussie-kiwi positions has “probably been weighing on New Zealand dollar sentiment in the near term.”.
According to a survey by RBNZ, inflationary expectations have been revised down to 2.3% in the fourth quarter, from initially expected 2.4%.
Meanwhile, the US currency remained pressured after Federal Reserve Chair-nominee Janet Yellen said in front of the Senate Banking Committee on Thursday last week that as US economy was beginning to show progress, rates of inflation and unemployment still have more room to approach central bank’s targets. Markets considered such comments as rather dovish, as it seemed Fed policymakers wanted further solid proof of economic improvement before making a move towards reduction of monthly asset purchases.
The other counterpart of the kiwi, the Aussie dollar also advanced against the greenback for a second trading day, as the MSCI Asia Pacific index of shares rose by 3.2% in the last three days. Today the MSCI index remained unchanged, but probably the last three trading days, in which the value of the index increased, had a positive impact on the demand for the two higher-yielding currencies. The same goes for the Canadian dollar, which advanced against its US counterpart to highs, which were unseen since 7-th of November.